Executor Appointments: Personal vs Trustee Companies

The Executor’s Role

The executor is an essential role in any Will. They are given the responsibility of administering the deceased’s estate as per their last and final Will with many obligations and duties to follow.

The law is flexible as to who can be appointed as an executor as long as the executor is over 18 years old, of sound mind, not currently serving a prison sentence and/or not an undischarged bankrupt. It is recommended, where possible, an executor is an Australian resident due to practicality issues and tax implications.  A testator may wish to consider family members, close friends, or a professional e.g. trustee company. An executor can also be a beneficiary of the estate.

Personal vs Trustee Companies

There are many advantages and disadvantages to consider when choosing the type of executor to appoint. Appointing a family member, friend or loved one as an executor is very common and can provide many benefits, including:

• cost efficiency;
• personal understanding of the testator’s wishes;
• personal connection with beneficiaries with access to required information and documentation for estate administration purposes;
• likely capacity to assume the role.

A professional executor can also provide many benefits, including a breadth of experience and impartiality, together with an understanding of the duties and obligations in relation to the administration of the estate; potentially reducing any risk of conflict and litigation.

However, the benefits of trustee companies typically come at a higher cost compared to personal appointments. Trustee companies can charge fees in the form of commission for their professional services. This can often range from 5-6% of the value of the estate with the true amount being unknown until the death of the testator.¹ As such, this leads to large sums being deducted from the overall estate leaving beneficiaries stunned and inheriting far less than expected. An often stressful and emotional process made harder.

Trustee Company Appointment Gone Wrong

Recently, a son of a deceased located in NSW who was the sole beneficiary of his mother’s estate, was left shocked and saddened to find that the trustee company appointed as executor by his later mother was able to retain nearly $60,000 in commission for acting in such capacity.  An awful realisation for the sole beneficiary and only child of the deceased, that this sum of money far exceeded any costs of appointing a family member or friend as a personal executor or even an Australian Legal Practitioner.

Whilst one should be compensated for their pains and troubles when to taking on an onerous role such as an executor, this exact scenario emphasises the importance of understanding who you are appointing as your executor when making your Will.

Understandably, a trustee company, may in many situations be the best (or only) option for the appointment of an executor.  If this is the case, research should be undertaken to ascertain the associated fees and expenses.